Chemical, plastics manufacturer plans new $2B Gulf Coast plant

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Dive Brief:

Chemical and plastics manufacturer LyondellBasell said it is planning to build a $2 billion plant somewhere along the Gulf Coast, but that it will not finalize its decision on where the exact site will be for up to a year, according to the Houston Chronicle.

The new facility, which will serve North America and South America, will use propane to manufacture chemicals and polypropylene for plastic and fabric applications. Company CEO Bob Patel told the Chronicle that the major U.S. end market for the polypropylene produced in the plant will be the automobile industry, which uses the plastic for various body and interior components in order to make cars lighter.

In addition to this latest project, the company has a $2.4 billion facility in Houston and a tertiary butyl alcohol refinery in Pasadena, TX, planned to start construction. The Texas Gulf Coast, according to the American Chemistry Council, makes up about 38% of the petrochemical plants completed since 2010 and planned through 2023, all of which has been made possible by relatively inexpensive natural gas from U.S. shale production.

Dive Insight:

These massive projects have often been behind the volatility of construction starts figures, reported monthly by outlets like ConstructConnect and Dodge Data & Analytics. In fact, according to Dodge, September saw the commencement of the $6 billion Shell ethane cracker plant in Beaver County, PA, which was one of three big projects that drove construction starts up 14% from August to a seasonally adjusted rate of nearly $815 billion and provided a 37% surge in the nonresidential sector last month.

The ethane plant is projected to generate 6,000 construction jobs and 600 permanent positions over the next 10 years. Shell Chemical Appalachia announced it would build the plant in June of 2016, and it was also revealed that the state gave the company a 25-year, $1.65 billion tax credit to build the new facility in Pennsylvania. To adequately staff the project, local unions, at least 17 of which will be constructing the plant, said they've been ramping up apprenticeships and other worker training programs.

Back in May, The Dow Chemical Company announced it had upped its 10-year U.S. growth strategy to $12 billion. And last week, according to KATC, Louisiana Gov. John Bel Edwards announced $2 billion in Dow chemical manufacturing investments, adding to the $1 billion the company, according to Edwards, already injects into the Louisiana economy.